Will Unilever's sustainability leadership pay off?

During his presentation, Kees Kruythoff said that sustainability is being embedded into all of Unilever’s operations -- its procurement and supply chain, its manufacturing, its marketing (more slowly) and even in its efforts to influence the way consumers use its products.That’s partly because the world’s big problems create big opportunities for business.

“We live in a world where the population is growing, climate change is accelerating, water is scarce and 1 billion people are hungry. And another 1 billion are overweight,” Kruythoff said.

“Companies,” he said, “can no longer sit on the sidelines waiting for governments to take action on the huge environmental and social problems that face us.”

He said there’s no turning back from the company’s commitment to sustainability: “It drives growth. It drives efficiency. It drives innovation…This is how we run the business.”

But -- aside from the obvious eco-efficiency gains -- what’s unclear is how the effort will pay off with consumers. It costs more for the company to source sustainable palm oil or cage-free eggs, executives said. But will consumers pay more, for example, for Hellman’s Real Mayonnaise because it is made with cage-free eggs?

Kruythoff told me that, outside the U.S., brands that have been showcased as sustainable have performed well. Lifebuoy soap, concentrated laundry detergents that use less packaging and water and Comfort One Rinse fabric conditioner, which saves water, all have performed well. “These brands have all grown by double digits, faster than the average of the company,” he said.

He also told me that the Unilever brand and its sustainability commitments will become more prominent in U.S. marketing soon. Lipton Tea, for example, will be positioned as a brand that is healthy and good for the environment.

In an interview today with the Guardian, Unilever’s Paul Polman said many in the financial markets still don’t understand that the company has moved beyond old-style corporate social responsibility:

With Unilever, the Sustainable Living Plan is our business model. So we spend an enormous amount of time explaining it to our investors.

Does everyone get it in the City [and Wall Street]? No, and to expect it will ever happen is wishful thinking but investors will increasingly value our business on the basis of what we are doing.

Still, Polman also said Unilever’s sustainability strategy is creating waves across the corporate sector: “We are showcasing a different business model that shows how you give to society and the environment rather than just taking from them.”

It will be fascinating to see where Unilelver’s bold approach will spread.